Long Term Performance of Islamic Share Price for Initial Public Offerings (IPOs) in Malaysia: Evidence from Sharia-Compliant Companies Listed on the Malaysian Stock Exchange (2006-2010)

Nashirah Binti Abu Bakar
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Nashirah Binti Abu Bakar: Universiti Utara Malaysia

International Journal of Management Science and Business Administration, 2016, vol. 2, issue 6, 55-66

Abstract: The objective of this study is to investigate the long-term (one to three year) performance of initial public offerings (IPOs) for sharia-compliant companies listed on the Malaysian Stock Exchange (MSE) for the period from 2006 till 2010. This study examines why some IPOs companies have a positive, and some IPOs companies have a negative long-term cumulative abnormal return (CAR). KLCI index is used as a benchmark for measuring long-term performance of IPOs for sharia-compliant companies. The empirical results show that the long-term performances for sharia-compliant companies are performed better (16.81 percent) than their benchmark for CAR equal-weight and the result for CAR value-weight show a slightly outperformed their benchmark (-0.07 percent). The results also indicate that CAR for equal-weight and value-weight of IPOs for sharia-compliant companies are significantly higher over performing by 14.58 percent and 4.11 percent respectively in the year 2006. While the results in 2007 (-1.34 percent) and 2008 (-3.43 percent) for value–weight are underperformed. This study also found that the underpricing, offer price, offer size, market type, trading/service industry, consumer product industry, property industry and REIT industry were statistically significant.

Keywords: Islamic Finance; Sharia-Compliant Companies; Initial Public Offerings (IPOs); Long Term Performance; Cumulative Abnormal Return (CAR) (search for similar items in EconPapers)
JEL-codes: M00 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:mgs:ijmsba:v:2:y:2016:i:6:p:55-66

DOI: 10.18775/ijmsba.1849-5664-5419.2014.26.1005

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